Core Viewpoint - The company's performance in H1 2025 met expectations, with a decline in cash collection and overall stable profitability. New products, models, and marketing strategies are expected to drive growth improvement in the second half of the year [1]. Financial Performance - In H1 2025, the company achieved revenue of 2.5 billion yuan, a year-on-year decline of 40%, and an adjusted net profit of 610 million yuan, also down 40%. The overall gross margin was 59.0%, up 0.2 percentage points year-on-year, while the adjusted net profit margin was 24.6%, down 0.1 percentage points [2]. - The pre-collection of customer payments decreased sequentially, with amounts at the end of H1 2024, H2 2024, and H1 2025 being 1.79 billion yuan, 1.75 billion yuan, and 1.43 billion yuan respectively, indicating current operational pressures in the industry [2]. Brand Performance - Revenue by brand in H1 2025 showed a significant decline: Zhenjiu at 1.49 billion yuan (-45%), Lidu at 610 million yuan (-9%), Xiangjiao at 280 million yuan (-39%), and Kaikouxiao at 80 million yuan (-64%). Lidu's performance was driven by the growth of mid-range products [3]. - Revenue by price segment indicated declines for high-end white liquor (-47%), next-high-end (-42%), and mid-range and below (-31%), with high-end and next-high-end segments experiencing a year-on-year decrease in market share due to weak demand and ongoing drinking policies [3]. Strategic Response - Since H2 2024, the company has faced significant downward pressure in the liquor industry, maintaining a cautious shipping pace to alleviate channel inventory pressure. The company is launching new products and adopting innovative business models, such as the "Wanshang Alliance" model, to enhance marketing and customer engagement [4]. - The introduction of new products and a lower comparative base are expected to lead to improved performance growth in the second half of the year [4].

Core Viewpoint - The article discusses the increasing focus of liquor companies, particularly sauce-flavored liquor brands, on the banquet market as a new battleground for growth, with the launch of "Taiyuan Red" by Moutai Health Wine Industry as a significant move in this direction [1][5]. Group 1: Product Launch and Strategy - "Taiyuan Red" has been revamped with a new packaging design that emphasizes traditional cultural symbols and festive themes, using a dominant "Chinese red" color to enhance its appeal for banquet occasions [1][2]. - The product offers two alcohol content options, 53° and 43°, to cater to different consumer preferences and various banquet scenarios [2]. - The pricing strategy remains within the hundred yuan range, targeting the mass banquet market, which is seen as a key area for growth [4][5]. Group 2: Industry Trends and Competition - Other liquor companies, including Guotai, Xijiu, and Jinsanjiao, are also intensifying their efforts in the banquet market, indicating a broader industry trend [7]. - The shift in focus to banquet sales is a response to the decline of corporate group purchases due to new regulations, prompting brands to seek new growth opportunities [9]. - The banquet market is projected to be a significant growth area, with an estimated capacity of 2300 to 2500 billion yuan, representing about 40% of the overall liquor market [13]. Group 3: Consumer Behavior and Market Dynamics - Despite the industry's enthusiasm for the banquet market, consumer behavior is becoming more rational, leading to a trend of consumption downgrade [14][16]. - The emergence of smaller-scale banquets is changing the dynamics of liquor consumption, with companies adjusting their promotional strategies to accommodate this trend [16]. - The younger generation, particularly those born in the 90s and 95s, is becoming a key consumer group, emphasizing practicality and cost-effectiveness over traditional notions of prestige [14][17].

Core Viewpoint - The company anticipates a significant decline in revenue and net profit for the first half of 2025, primarily due to high base effects, cyclical downturns, and impacts from Q2 market conditions [1] Revenue Summary - The company expects revenue for H1 2025 to be between 2.4 to 2.55 billion RMB, representing a year-on-year decline of 38.3% to 41.9% [1] - All sub-brands are estimated to face pressure, with the main brand, Zhenjiu, experiencing a decline consistent with the overall trend, while Lidu shows limited decline [1] Profit Summary - The forecasted net profit attributable to shareholders for H1 2025 is between 570 to 580 million RMB, reflecting a year-on-year decrease of 23% to 24% [1] - The non-IFRS net profit is expected to be between 610 to 620 million RMB, indicating a decline of 39% to 40% [1] - The adjusted net profit margin is projected to remain stable at 24% to 25% [1] Market Strategy - The company is actively controlling shipment rhythms to help clear channels, with stable sales shares for key products in core markets [1] - The company is focusing on nurturing brand recognition and has positive progress in new product launches, which are expected to contribute to revenue in H2 2025 [1] Industry Context - The industry is undergoing a deep adjustment, with the company adapting its strategy to address the pressures from declining business consumption and price reductions in premium liquor [1] - The company is shifting its customer base towards new quality-driven enterprises and is introducing high-quality products at competitive price points [1] Future Outlook - The company anticipates a potential recovery in revenue growth in H2 2025, following a concentrated clearing and product updates in 2025 [2] - The non-IFRS net profit forecasts for 2025 to 2027 have been adjusted to 1.23 billion, 1.37 billion, and 1.68 billion RMB respectively, reflecting a more cautious outlook [2]

Investment Rating - The report maintains a "Buy" rating for the company [1] Core Views - The company is facing significant revenue pressure in the first half of 2025, with expected revenue decline of 38.3% to 41.9% year-on-year, and net profit decline of 23% to 24% [7] - Despite the challenges, the company is actively managing its operations, maintaining a stable profit margin of 24% to 25% in the first half of 2025, indicating strong cost and expense control capabilities [7] - The company is focusing on clearing inventory and optimizing its distribution channels, with expectations for a more controlled revenue decline in the second half of 2025 as market conditions improve [7] - The company is adapting to industry pressures by shifting its customer base and product offerings, including the introduction of new products at competitive price points [7] Financial Forecasts - Total revenue is projected to be 7,060 million in 2023, with a slight increase to 7,067 million in 2024, followed by a significant drop to 5,026 million in 2025 [1] - The net profit for 2023 is estimated at 2,327 million, decreasing to 1,324 million in 2024, and further to 1,158 million in 2025 [1] - Non-IFRS net profit is expected to be 1,623 million in 2023, with a decline to 1,676 million in 2024, and a drop to 1,233 million in 2025 [1] - The report adjusts the non-IFRS net profit forecasts for 2025 to 12.3 billion, 13.7 billion, and 16.8 billion for 2025, 2026, and 2027 respectively [7] Market Data - The closing price of the stock is 7.38 HKD, with a market capitalization of approximately 22,749.82 million HKD [5] - The company has a price-to-earnings (P/E) ratio of 9.77 for the current price and latest diluted earnings per share (EPS) of 0.69 [1] - The company’s book value per share is 4.12, with a debt-to-asset ratio of 28.84% [6]

Investment Rating - The investment rating for the company is "Buy" (maintained) [1] Core Views - The company is actively responding to industry adjustments by transforming its strategies, focusing on nurturing enterprise customer structures and launching new products in the mid-to-high price range to create incremental growth [8] - The company aims to maintain price stability for existing products while introducing high-quality new products priced between 500-600 RMB to attract consumers [8] - The company is implementing a dual-driven strategy for national expansion and price range diversification, with a focus on experiential marketing to drive steady revenue growth [8] - The financial forecasts for the company indicate a stable performance in 2025, with slight adjustments to the non-IFRS net profit predictions for 2025-2027 [8] Financial Summary - Total revenue for 2023 is projected at 7,060 million RMB, with a growth rate of 20.56%. By 2027, revenue is expected to reach 8,929 million RMB, reflecting a growth rate of 14.54% [1] - The net profit attributable to the parent company for 2023 is estimated at 2,327 million RMB, with a significant increase of 125.96%. By 2027, it is projected to be 2,106 million RMB, with a growth rate of 22.98% [1] - The latest diluted EPS for 2023 is 0.69 RMB, expected to rise to 0.62 RMB by 2027 [1] - The company’s P/E ratio is projected to decrease from 15.88 in 2024 to 9.98 in 2027, indicating an improving valuation over time [1]